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7 tips to help deliver a better suitability report

On point suitability reports are key to the regulator’s view of a well run adviser firm.

While CIPs, platforms, AUM are all good tools to make an adviser’s life easier and a service to a client better and more efficient, they are not the reason a client comes to an adviser.

I feel confident in saying that no client EVER put forward as a reason for seeking advice things that we can see in fact finds and suitability reports like:

• Online access to portfolios

• To consolidate my pensions

• To have ease of administration in my affairs

• To have access to over 2,000 funds from a range of investment professionals

• To have an unfettered range of funds.

Because we have evolved so much as a profession over the last six years or so, we feel really clever with the things we do now, but clients probably don’t really care that much about them – we can’t take any credit for acting professionally, it’s what we are supposed to do.

I don’t know, or really care, how the engine works in my car – or that a different make builds theirs differently – if I get a car, I expect it to have an engine and for it to be reliable.

To make sure not to come unstuck on suitability, there are a few easy tips to follow:

1. Record the client’s objectives in their own words. That way you can capture any nuance in what they are saying. By this, I don’t mean write it down – actually record it.  There are some great tools to do this, whether it’s an app on a phone or a specialist tool like a livescribe pen.

2. Refresh yourself with COBS. If you have a read of COBS 9.2 (assessing suitability) and COBS 9.4 (suitability reports) you’ll see that a good fact find will actually write 75% of your suitability report for you!

3. Deliver back the client’s objectives in their own words in the suitability report – You have to put the client’s objectives in the suitability report anyway, so why not use their own language.  It will help them know that you have understood what they want to achieve.

4. Avoid interpreting the client’s objectives into our language. Let’s face it, it’s too easy when a client says, ‘I have a bunch of pensions and I am not sure what they all do’ to interpret that as ‘the client wants to consolidate their pensions’ – these are different things.

5. Refer back to those objectives whenever you make a recommendation. You will usually find one objective needs action across lots of different areas (pensions, investments, protection) so bring it all together in an action plan.

6. Have a default assumption that the client’s existing arrangements will serve them perfectly well.    Too often, particularly when earnings are based on AUM, it’s easy to assume a client should move to a CIP when actually the benefits are borderline.  Careful analysis of charges and the commensurate benefits needs to be applied.

7. Read FG12/16 – it’s only 20 something pages long and a brilliant read, full of best practice tips on doing replacement business well. I feel confident that the findings from the FCA’s thematic review into suitability will be reflective of this, one of the last documents the FSA produced.

Finally, it is sometimes too easy to be driven by a fear of compliance. Putting the client’s objectives front and centre actually enables compliance to take care of itself. Everyone wins.

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